Out Of The Contraction Gap, Indonesian Manufacturing PMI Up To 51.5 In August 2025

JAKARTA - The activities of the manufacturing sector in a number of countries have improved, although not a few have been entangled in the contraction phase. However, this August, Indonesia managed to get out of the contraction phase in the last 4 months.

Based on the S&P Global report, Indonesia's manufacturing Purchasing Managers Index (PMI) was at the level of 51.5 in August 2025, up from the previous month 49.2 in July 2025 or below the 50 threshold.

The performance of Indonesian manufacturing PMIs has previously contracted since April 2025 which collapsed to 46.7.

On the same day, S&P Global also released PMI performance from a number of Asean countries, such as the Philippines (50.8), Thailand (52.7) and Myanmar (50.4).

The latest report also shows that Japanese PMI rose to 49.7 in August 2025, but is still below the 50 threshold, meaning it is in the contraction phase. Then, South Korean Manufacturing PMI is also still expanding despite its slight growth to 48.3 in August from the previous month 48.

On the other hand, Taiwan's manufacturing PMI grew to 47.7, an increase from the previous month 46.2. In fact, the National Bureau of Statistics noted that China's manufacturing PMI also contracted despite its slight growth to 49.4 in August 2025 from 49.3 in July 2025.

From this report, countries are still in the contraction phase, on average, constrained in terms of decreasing demand, both domestic and export. As a result, manufacturing production needs to be adjusted to market conditions.

However, S&P Global economist still assesses that there is a signal of recovery in a number of countries. For example, industries in Japan are still continuing production and adding manpower in case demand conditions increase in the future.

"There are also indications that inflationary pressures have eased. In particular, the level of input cost inflation has persisted near its lowest level in the last four and a half years of July, selling prices are also at the weakest level in more than four years," said Economics Associate Director at S&P Global Market Intelligence Fiddes.

Meanwhile, manufacturing in Indonesia is driven by an increase in both production and volume of new orders. In response to this, the company increased purchasing activities and the number of workers in the middle of the third quarter to adjust the need for additional production.

Industry companies also increase their purchasing stock, but inventory of goods has decreased because it is used to fulfill orders.

S&P Global Market Intelligence economist Usamah Bhatti said, in the middle of the third quarter of 2025, Indonesia's manufacturing sector showed improvements to operational conditions for the first time after the contraction of the last 4 months.

"The company recorded new growth in new outputs and orders, with export orders recording the fastest increase in nearly two years," Bhatti said in a recent report on Monday, September 1.

In terms of price, the strengthening of the United States (US) dollar is said to have helped raise the cost of importing raw materials. As a result, input costs remain high even though the inflation rate is one of the lowest in the last five years.

To maintain the margin, industry players have raised the selling price at the fastest rate since July 2024.

Although the cost challenges remain, industry players remain optimistic. The survey shows confidence that production will continue to increase in the next year, supported by hopes of improving economic conditions and consumer purchasing power.

"The company also hopes that output growth can continue in the near future, as optimism grows towards the prospects for next year," he said.